About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2016
>>
[2016] ZAFSHC 43
|
|
Morobi and Others v Umyezo Leisure Investments (Pty) Ltd and Others (2501/2015) [2016] ZAFSHC 43; [2016] 2 All SA 845 (FB) (28 January 2016)
IN THE HIGH COURT
OF SOUTH AFRICA
FREE STATE
DIVISION, BLOEMFONTEIN
Case
number: 2501/2015
In
the matter between:
LINKIE
VIVIAN
MOROBI
................................................................................................
1
st
Applicant
TIISETSO
LORRAINNE
MORRISON
...........................................................................
2
nd
Applicant
MOTLALEPULE
SARAH
CHAO
....................................................................................
3
rd
Applicant
(In
her capacity as the executrix: deceased estate:
Kediemetse
Martha Chao)
N
B MAYEKISO
NO
...........................................................................................................
4
th
Applicant
(In
her capacity as the executrix: deceased estate:
Vakele
Joseph Mayekiso)
UMYEZO
LEISURE INVESTMENTS (PTY)
LTD
....................................................
1
st
Respondent
ETAPELE
INVESTMENTS (PTY)
LTD
.....................................................................
2
nd
Respondent
JAMELA
JOSEPH
MHLAMBI
.....................................................................................
3
rd
Respondent
THAMSANQA
GODFREY
MAYEKISO
......................................................................
4
th
Respondent
PALAETSO
ALINA LIAU-
MOKHOETI
.....................................................................
5
th
Respondent
LETELE
CEDRIC LIONEL
MAKHETA
.....................................................................
6
th
Respondent
CORAM:
RAMPAI, J
HEARD
ON: 26 NOVEMBER 2015
JUDGMENT
BY: RAMPAI, J
DELIVERED
ON
: 28
JANUARY
2016
[1]
The matter came to court by way of motion proceedings. The
application was launched
on 27 May 2015. The applicants apply
for a prohibitory interim interdict. They contemplate initiating
action proceedings
against the respondents within 20 days after the
grant of the interim order they seek. The application is
opposed by four
of the six respondents.
[2]
The corporate structure needs to be explained in order to understand
the relational saga
in this matter. There are a number of
corporate enterprises involved. The flagship of them all is the
well-known Sun
International (South Africa) Limited. Then there
is Mangaung Sun (Pty) Ltd on the local front. The latter is a
local
satellite of the former, a global corporate colossal. Now
Sun International (South Africa) Limited, Thabo Community Trust,
Sun
International Employees Share Trust and Etapele Investment (Pty) Ltd,
the second respondent are the shareholders in Mangaung
Sun (Pty) Ltd.
[3]
Mangaung Sun (Pty) Ltd is the holder of a gambling licence. It
trades as the Windmill
Casino in Bloemfontein. The second
respondent holds 15.4% equity of the ordinary issued shares in
Mangaung Sun (Pty) Ltd.
[4]
Etapele Investments (Pty) Ltd in turn has four shareholders, namely:
Mathabo Business Investments
(Pty) Ltd; Tsela Tshoeu Investments
(Pty) Ltd; Belega Women’s Investments (Pty) Ltd and Umyezo
Leisure Investments (Pty)
Ltd, the first respondent. Each of
these shareholders holds an equity of 25% of the ordinary issued
shares in Etapele Investments
(Pty) Ltd.
[5]
Umyezo Leisure Investments (Pty) Ltd, originally had a number
of individual equity
stakeholders, namely: Ms Linkie Vivian
Morobi; Ms Tiisetso Lorraine Morrison; Ms Kediemetse Martha Chao, now
deceased and
Mr Vakele Joseph Mayekiso, also deceased. Now Ms
Motlalepule Sarah Chao, the executrix and Ms Beatrice Mayekiso, the
executrix
in the two deceased estates together with Ms Morobi and Ms
Morrison are the applicants in these proceedings. This is one
faction of the first respondent.
The
other individual equity stakeholders are Mr Jamela Joseph Mhlambi, Mr
Thamsanqa Godfrey Mayekiso, Ms Pelaetso Alina Liau-Mokhoethi
and Mr
Letebele Cedric Lionel Makhetha. They are the respondents in
these proceedings.
[6]
Besides the sixth respondent, Mr Makhetha, the third, fourth and
fifth respondents are the
directors and the other faction of the
first respondent. The sixth respondent appears to be repudiated
by the directors as
a spy who owes allegiance to the faction of
disgruntled shareholders. He is not really before me. His
separate notice
of intention to defend was emailed to the applicants’
attorneys but it was never filed. The second respondent,
Etapele
Investments (Pty) Ltd abides.
Brevitas
causa,
I shall refer to the third,
fourth and fifth respondents collectively as directors or
the trio or the respondents.
Wherever I use the last noun, it must be
understood to exclude the first, second and the sixth respondents
unless the context indicates
otherwise. They and the
first respondent, Umyezo, oppose the application.
[7]
From time to time Umyezo, as a shareholder, receives dividends from
Etapele. Over
the years Umyezo has seen its fair share of
infighting. Various shades of leadership crises have resulted
in what may
sadly be described as an endless
litany of senseless, but costly litigation. The current
application
is a classic example of a company at war with itself.
The relational feud has an adverse impact on the potential growth of
the troubled company. Enormous sums of money which Umyezo earns
as dividend from Etapele are wastefully used to defray the
high costs
of litigation to the great detriment of the intended beneficiaries.
This hopelessly aimless internal feud appears
to be fuelled by greed,
mistrust and position mongering. The destructive force of the
unending litigation saga lamentably
impoverishes the very
shareholders the company was floated and designed to benefit.
[8]
It would appear that on 12 March 2014 a notice in terms of section
61(9)
Companies Act 71 of 2008
was given by the board of directors of
Umyezo to the shareholders whose names were specified that a general
meeting of the company
would be held at the Windmill Casino in
Bloemfontein on 12 April 2014 at 10:00. The purpose of the
meeting and business to
be transacted were disclosed.
[9]
On 12 April 2014 none of the applicants except for the fourth
applicant attended the meeting.
The respondents, save for the
sixth respondent, attended the meeting. Item 3 on the agenda
concerned the appointment of directors.
The third, fourth and
fifth respondents were appointed as directors. At that stage
the company had no bank account.
The third respondent was
authorised to open a bank account. The third, fourth and fifth
respondents were also appointed as
the authorised signatories to the
company bank account. The minutes of the meeting were attached
to the founding affidavit
– vide “anx c”.
[10]
On 30 August 2014 the account of Ms N B Mayekiso was credited with an
amount of R39 843,75.
The money came from Umyezo Leisure
Investments (Pty) Ltd – vide “anx f”, replying
affidavit.
[11]
On 18 September 2014 Naidoo J gave an order by consent of all the
parties under case number 5093/13.
The order was attached to
the founding affidavit and marked “anx d”. Ms Laura
Claire Grobler and Mr Lebohang
T Shabe were cited as the first
and the second applicant respectively. Mr Kwidi Christopher
Makaba, Mr Molefi Simeon Litheko,
Etapele Investments (Pty) Ltd, the
second respondent herein, Umyezo Investments (Pty) Ltd, the first
respondent herein, Mangaung
Sun (Pty) Ltd, and Mr Letebele Cedric
Lionel Makhetha, the sixth respondent herein – were among 14
others cited as the first,
second, third, fourth, ninth and 13
th
respondents respectively. Naidoo J finally confirmed, by
agreement between the parties, the provisional rule
nisi
and finally declared that J J Mhlambi, Mr TG Mayekiso and
Ms P Liau also known as PA Liau-Mokhoethi to be directors
of Umyezo
Leisure Investments (Pty) Ltd – vide 2.5 “anx d”.
[12]
The first applicant, Ms Linkie Vivian Morobi, is and has always been
a legitimate shareholder in the
first respondent, Umyezo Leisure
Investments (Pty) Ltd. So was the second applicant, Ms Tiisetso
Lorrainne Morrison.
The third applicant’s deceased
daughter, the late K M Chao and the fourth applicant’s deceased
husband, the late V
J Mayekiso, were regarded and treated as
shareholders.
[13]
The first respondent was 1 of the 4 shareholders of the second
respondent. In turn the second
respondent was 1 of the 4
shareholders of the Mangaung Sun (Pty) Ltd. The third, fourth,
fifth and sixth respondents were
legitimate shareholders in the first
respondent, Umyezo Leisure Investments (Pty) Ltd just like the first
and the second applicants.
[14]
During 2013 a dispute arose between Umyezo and Etapele and among the
shareholders of Umyezo.
The dispute concerned the distribution
of dividends by Etapele Investments (Pty) Ltd to its shareholders,
namely Belega Women’s
Investments (Pty) Ltd, Mathabo Business
Investments (Pty) Ltd, Tsela Tshoeu Investments (Pty) Ltd, and
Umyezo Leisure Investments
(Pty) Ltd, the first
respondent herein. The equity stake of each of those four
corporate enterprises in Etapele Investments
(Pty) Ltd was 25% each.
The first mentioned three shareholders were dissatisfied. They
reckon that the last mentioned
shareholder, in other words Umyezo
Investments (Pty) Ltd, was receiving an unfair financial advantage
over them. They complained
that they were receiving a raw deal
from Etapele Investments (Pty) Ltd.
[15]
The argument of the aforesaid disgruntled three shareholders went
along the following lines, more or
less. Umyezo had only eight
individual shareholders but each of them, in other words the
disgruntled fellow shareholders,
had more than eight individual
shareholders. On account of such numerical disparities, they
complained that per capita the
individual shareholders in Umyezo were
financially better off than their counterparts in the other three
corporate enterprises
although all four of them held equal equity in
Etapele, the dispenser of dividends. They demanded, therefore,
that Etapele
must calculated dividends to its 4 shareholders in such
a way that all the individual shareholders of its four corporate
shareholders
ultimately receive precisely equal dividends.
Umyezo naturally disagreed, I suppose.
[16]
The dispute precipitated the launch of an application under case
number 5093/2013 by Ms L C Grobler
and another. The outcome of
that application was a consent order of 18 September 2014 by Naidoo
J.
[17]
The second respondent furnished the applicants with a written proof
of the various amounts it had paid
to the first respondent as
dividends. As on 31 May 2014 the total dividends paid was
R2 241 511,38 – vide
“anx e”. On
three occasions the second respondents paid such dividends into the
trust account of Mhlambi Attorneys
held at Standard Bank (SA) Limited
in Welkom. The total of those three payments was the sum of
R1 370 625.
The total was made up as follows:
R900 000,00, R375 000,00 and R95 625,00.
Subsequently the second respondent
paid a further amount of
R796 846,07 to the first respondent as dividend. The
shareholders of the first respondent have
a beneficial interest in
the securities of the first respondent.
[18]
The dividends in favour of the first respondent by the second
respondents were directly deposited into
the trust account of Mhlambi
Attorneys held at the Standard Bank Limited in Welkom. The
relevant account number was 43387500.
Mr J J Mhlambi was the
proprietor or senior partner of that law enterprise. The second
respondent paid out such dividends
following the court order of 18
September 2014 by Naidoo J – vide 6.1 “anx d”.
The required bank account
was subsequently opened in the name of
Umyezo Leisure Investments (Pty) Ltd with the Standard Bank Limited
in Welkom. The
relevant account number is 040194 353.
[19]
On 7 November 2014 the applicants attended a meeting in
Bloemfontein. The meeting was convened
by the sixth
respondent. The attendees called themselves the majority
shareholders of Umyezo Leisure Investments (Pty) Ltd.
The
agenda included an item about the directors of the first respondent,
Umyezo. According to the resolutions adopted at
that meeting
the third, fourth and fifth respondents were removed from office as
directors of the first respondent. They
were replaced by Mr L C
L Makhetha, the sixth respondent, Ms PA Liau-Mokhoethi, the fifth
respondent, Ms L V Morobi, the first
respondent and a certain N E
Matambuye. Ms LY Morobi, Ms N B Mayekiso, the fourth
applicant and Mr LCL Makhetha were
elected to represent the first
respondent in the second respondent. The company attorneys,
namely, Mhlambi Attorneys and
Modise Modise Attorneys were removed
and replaced with Moroka Attorneys. The concern was that the
directors of the company
had withheld the dividend funds due to the
shareholders and that they had failed to respond to their enquiries –
vide “anx
c”, replying affidavit.
[20]
On 13 November 2014 and pursuance to the aforesaid meeting of 7
November 2014 a memorandum was written
and signed by the third
applicant, Ms M S Chao. A certain Mr Khetheng Patrick Chao was
her co-author and co-signatory.
They indicated that they wrote
and signed the memorandum on behalf of the majority shareholders of
the first respondent, Umyezo
Leisure Investments (Pty) Ltd. The
memorandum was addressed to Mr J J Mhlambi, Mr G M (sic)
Mayekiso and Ms PA Liau-Mokhoethi
– the third, fourth and fifth
respondents. A great variety of complaints were levelled
against them. A wide range
of demands were then made. An
indication of the next line of action was given in case the demands
were not met by the directors.
[21]
Mangaung Sun (Pty) Ltd, Etapele Investments (Pty) Ltd, Nedbank
Limited, Free State Gambling & Liquor
Board, The Law Society:
Free State Province and Companies and Intellectual Property
Commission were copied. The memorandum
containing multiple
complaints and demands was distributed under a covering letter signed
by Ms L V Morobi, Ms TL Morrison, Ms
M S Chao and Mr LCL Makhetha, in
other words the first applicant, second applicant, third applicant
and sixth respondent. Although
the fourth applicant did not append
her signature to the letter, she unreservedly associated herself with
the letter. The
letter and memorandum were collectively marked
“anx f” and attached to the founding affidavit deposed to
by Ms N B
Mayekiso, the fourth applicant. The letter was
delivered per
tradio brevi manu
to Modise Modise Attorneys in Bloemfontein on 18 November 2014.
[22]
The respondents did not answer. The demands of the applicants
as embodied in “anx f”
were not met. On 27 May 2015
the applicants launched the current application under case number
250/2015. It was one
of many cases in the series of the hostile
saga involving the corporate enterprises that had financial ties with
Mangaung Sun (Pty)
Ltd. In these proceedings only six of such
previous cases were referred to. They were case number
3794/2009, case 5093/2013,
case 5819/2008, case 1063/2010, case
304/2012 – vide “anx 03”, “anx d”, “
anx d to replying
affidavit” “anx lmc”, “anx
d” replying affidavit” and “anx f”.
The
last of these was in the Thaba Nchu District Court. The
rest were in this provincial high court.
[23]
This completes the synopsis of the undisputed facts together with
facts which, although denied, could
not be seriously disputed.
[24]
The issue in the case was whether the applicants have made out a case
to justify the grant of an interim
interdict.
[25]
Mr Van der Merwe, counsel for the applicant, submitted that a proper
caste has been made out.
Accordingly, he urged me to grant a
interim relief in accordance with the notice of motion.
[26]
However, Mr Snellenburg, counsel for the respondents, differed.
He submitted that no proper case
had been made for the interim relief
sought. Therefore, he urged me to deny the relief.
[27]
In
National Treasury & Others v
Opposition to Urban Tolling Alliance and Others
2012 (6) SA 223
(CC) at para [41] the requisites for the grant of an
interim interdict were restated:
“
[41]
The High Court relied on the well known requirements for the grant of
an interim interdict set out
in Setlogelo and refined, 34 years
later, in Webster. The test requires that an applicant
that claims an interim interdict
must establish (a) a prima facie
right even if it is open to some doubt; (b) a reasonable apprehension
of irreparable and imminent
harm to the right if an interdict is not
granted; (c) the balance of convenience must favour the grant of the
interdict and (d)
the applicant must have no other remedy.”
Moseneke DCJ.
[28]
In the first place, since they seek an interim interdict, the test
requires that the applicants must
establish a
prima
facie
right, even if it is open to some
doubt, to the interim protection. This is the first element of
the test.
[29]
The establishment of a prima facie right was elucidated as follows
about six decades ago in
Webster v
Mitchell
1948
(1) SA 1186
(WLD) at 1189 :
“
If
the phrase used were ‘prima facie case’ what the court
would have to consider would be whether the applicant had
furnished
proof which, if uncontradicted and believed at the trial, would
establish his right. In the grant of a temporary interdict,
apart
from prejudice involved, the first question for the court, in my view
is whether, if the interim protection is given, the
applicant could
ever obtain the right he seeks to protect. Prima facie that has to be
shown. The use of the phrase ‘prima
facie established though
open to some doubt’ indicates, I think, that more is require
than merely to look at the allegations
of the applicant, but
something short of a weighing up of the probabilities of of
conflicting versions is required.”
Clayden,
J.
[30]
Still on the same page 1189 Clayden, J went on to say the following
about the proper approach to ascertain whether
or not a
prima
facie
right has been established:
“
The
proper manner of approach I consider is to take the facts as set out
by the applicant, together with any facts set out by the
respondent
which the applicant cannot dispute, and to consider whether, having
regard to the inherent probabilities, the applicant
could on those
facts obtain final relief at a trial. The facts set up in
contradiction by the respondent should then be considered.
If serious
doubt is thrown on the case of the applicant he could not succeed in
obtaining temporary relief, for his right, prima
facie established,
may only be open to 'some doubt'. But if there is mere contradiction,
or unconvincing explanation, the matter
should be left to trial and
the right be protected in the meanwhile, subject of course to the
respective prejudice in the grant
or refusal of interim relief.”
See
Webster
supra
.
[31]
In
Gool v Minister of Justice and
Another
1955
(2) SA 682
(C) at 688E Ogilvie Thompson J approvingly said about the
proper approach as laid down in
Webster
v Mitchell
, supra:
“
In
my view the criterion on an applicant’s own averred or admitted
facts is: should (not could) the applicant on those facts
obtained
final relief at the trial. Subject to that qualification, I
respectfully agree that the approach outlined in Webster v
Mitchell,
supra, is the correct approach for ordinary interdict applications”.
[32]
The version of the applicants was that a meeting was convened; that a
few selected shareholders were notified about
it; that all the
applicants were not given notice; that the secret meeting was held;
that a false proxy form was deliberately used
to deceitfully make up
the quorum; that the directors were then elected; and that those
positions of power and control were allocated
to the respondents by
the respondents themselves behind the backs of the applicants.
Therefore, it was their case that since
the meeting was procedurally
irregular and not quorate, the respondents could not competently have
transacted the business
of the company as they purported
to do. Therefore, the puchline of their case was that all the
resolutions taken at that meeting
were unlawful.
[33]
Among others, two of the resolutions unlawfully taken at the secret
meeting, according to the applicants,
determined that the respondents
were the directors of the company (vide “anx c”, founding
affidavit). Subsequent
to that meeting another resolution was
taken that the first respondent should declare no dividends until the
company was in a healthy
financial state – vide “anx
04”. As directors, the respondents subsequently resolved
to stop distributing
dividends the company received from the second
respondent. The resolution to pay no dividends to the
shareholders was a breach
of fiduciary duty according to the
applicants. They were suspicious as to why the dividends from
the second respondent were
deposited into the bank account of Mhlambi
Attorneys instead of the bank account of the first respondent itself.
[34]
The applicant’s version was then crowned with the following
averments as regards their right,
which, as they said, was threatened
by the unlawful conduct of the respondents:
“
43.
In light of the fact that the applicants are 50% shareholders of the
first respondent, we have been advised that
we have a clear right,
alternatively a
prim facie
right to payment of dividends by the first respondent, further and or
alternatively, a clear right, alternatively a
prima
facie
right that the directors of the
first respondent act in accordance with their fiduciary duty and in
the best interest of the shareholders
of the first respondent.”
[35]
I am called upon to consider whether each of the four applicants had
furnished proof which, if uncontradicted
and believed at the trial,
would establish her alleged rights. The first question is
whether, if interim protection is given
now, each of the applicants
could ever finally prove and obtain the right she temporarily seeks
to protect now in these temporary
interdict proceedings. In my
view each of one of them, as an individual and not as a group, has to
show
prima facie
proof that final protection would be given by virtue of their common
version as outlined above –
Webster
supra.
[36]
The proper approach I am required to adopt is to consider the facts
as set out by the applicants, together
with any facts set out by the
respondents which the applicants cannot dispute and to consider
whether, on those facts, the applicants
should be given a final
protective relief at the trial.
[37]
As regards the fourth applicant, Ms Mayekiso, she is the widow of the
late V J Mayekiso who died on
14 November 2012. He was a
shareholder in the first respondent but she never was. She is
an executrix of the deceased
estate: late V J Mayekiso.
She could not, by virtue of her official and representative capacity
as an executrix automatically
step into the shoes of her deceased
spouse to become a shareholder of the first respondent. No
specific resolution or clause
in the first respondent’s
articles of association or incorporation was referred to in terms of
which she could lawfully have
succeeded her deceased husband as a
shareholder. I take it, therefore, that the first respondent’s
shares were not
hereditary. Nonetheless the deceased estate
remains a claimant of the equity the deceased V J Mayekiso had in the
securities
of the first respondent.
[38]
It follows, as a matter of logic, that when the deceased estate is
finally liquidated and distributed,
the executrix will have no
further lawful claim against the first respondent. Such an event
would terminate her relationship, as
a claimant, with the first
respondent.
[39]
Having considered the facts set up by the fourth applicant together
with the facts set up by the respondents
the which the applicants
cannot dispute, I am persuaded that a serious doubt is cast on the
fourth applicant’s alleged right.
On those facts she would not
be able to establish that she has a prima facie protectable right.
She cannot, therefore, succeeds
to obtain temporary relief. On
the facts, it cannot be found that the fourth applicant has
established a
prim facie
right at all – not even one open to some doubt.
[40]
As regards the third applicant, Ms Chao, she is the surviving parent
of the late MK Chao who died on
9 May 2003, almost 13 years ago.
Her deceased daughter died long before the relevant corporate
structure was put in place.
It follows, as a matter of
common-sense, therefore, that her daughter was never a shareholder of
the first respondent. The
fourth applicant could not
posthumously have become a shareholder because the first respondent’s
shares were not shown to
be transferrable. The name of one
Martha Chao appears on the list of the first respondent’s
shareholders attached to
the court order, “anx d”, of 18
September 2014 by Naidoo J. If that Martha Chao was one and the
same person as
Martha Kediemetse Chao who died over 11 years before
the court order, then she could not posthumously have been declared a
shareholder.
A deceased person cannot acquire rights and
obligations. In my view, the case of the third applicant
appeared to be far weaker
than that of the fourth applicant.
The remarks I made, the views I express and the conclusion I reached
in connection with
the fourth applicant apply to the third applicant
as well but with greater force.
[41]
Let me pause here before I proceed to deal with the first applicant.
As far as the fourth applicant
and the third applicant were concerned
the question was:
‘
Ba
tena ba tjha ba tsholang?
(What was it
that they were trying to salvage from the fire when they burned their
fingers?) Mr Van der Merwe submitted that the
essence of their case
was to have the second respondent restrained from paying any further
dividends to the respondents which dividends
the second respondents
is obliged to pay to the first respondent. Well I have just
found that the fourth applicant and the
third applicant had
absolutely no rights whatsoever to seek any interim relief because
they failed to establish a
prima facie
proof that they were the first respondent’s shareholders. The
submission that it was irrelevant to consider whether the two
ladies
were in fact shareholders or not was misplaced. None of them
had direct and substantial interest in the shareholding
of the first
respondent. As executors their interest, however substantial, was
indirect and not direct. That materially disqualified
them. They were
not entitled to be given notice of the first respondent’s
meetings. To that procedural right and the related
participatory
rights they were not entitled. They could ride on the back of any
legitimate shareholder(s) as their counsel argued.
It follows,
therefore, that they had no legitimate business to be in the arena.
[42]
As regards the first applicant, Ms Morobi, her credentials were not
questionable. The trio did
not deny that she was a legitimate
shareholder of the first respondent. She had a right to payment
of dividends by the first
respondent. Therefore, she had the
right to seek interim protection of her right provided there was a
reasonable threat or
reasonable apprehension of irreparable and
imminent harm.
[43]
The recurring theme of her case was that a secret meeting was
convened, that she was deliberately marginalised;
that a clandestine
meeting was held; that an untrue proxy form unauthorised by the third
applicant was dishonestly contrived, signed
and presented to create
the false impression that the meeting was quorate to transact the
business of the first respondent whereas
and in reality, there was
not quorum to do so; and that the respondents took all those
irregular steps in order to control the
dividends distribution in a
manner detriment to her rights.
[44]
The first applicant was aggrieved. She alleged that she was not
given notice of the general meeting
in terms of
section 6(1)
Companies Act 71 of 2008
. That meeting was held in Bloemfontein
on 12 April 2014 at 10:00. Although she did not attend the
meeting Ms N B Mayekiso,
the fourth applicant did. The latter
alleged that Ms LC Grobler co-incidentally told her about it on 7
April 2014.
By then the notice in terms of
section 6(1)
had not
yet been sent out by the first respondent. According to her
version that notice was sent out five days later, on
12 April 2014.
[45]
However, she did not complain at the meeting that she was not given
notice thereof. Her failure
to do so tended to give credence to
the respondent’s version that she was given notice.
[46]
The respondent had earlier alleged that the fourth respondent had
telephonically called all the applicants,
informed them about the
meeting and asked them to provide their addresses. Because they
all refused to furnish him with their
correct addresses, he could not
sent the hard copies of the notice. Once the belated
explanation pertaining to Ms Grobler
is discounted, nothing else
remains to explain how the second respondent’s deponent
acquired knowledge of the meeting, a
meeting that was supposed to be
a guarded secret for that matter.
[47]
Now the pendulum swings to the other extreme end. Given
all those peculiar circumstances it has to be accepted
that the first
applicant’s deponent attended the meeting because the fourth
respondent telephonically informed her about
it; that the first
applicant was similarly informed about it; that there was
nothing secret about it; that the first applicant
freely elected to
absent herself from it; that the first applicant and her other two
co-applicants and the sixth respondent deliberately
stayed away from
it in a bid to impair the quorum; that the sixth respondent also
freely absented himself from it; that the first
applicant actively
colluded with her co-applicants as well as the sixth respondent to
frustrate the meeting of the first respondent
and that the first
applicant demonstrated, through words and deeds, that she was a
collusive collaborator who did not really
have the interest of the
first respondent at heart.
[48]
Moreover, the respondents alleged that Phatsoane Henny Attorneys also
gave notice of the meeting to all the first respondent’s
shareholders. Attached to the founding affidavit as “anx
b” was a copy of the second respondent’s meeting
which
was held at the same day as all the meetings of its four
shareholders. The applicants erroneously believed that it
was a
notice sent out by the first respondent. There was no
explanation as to how the applicant’s acquired possession
of
the notice of the second respondent’s meeting.
[49]
The applicants cannot deny that four general meetings of all the
corporate shareholders of the second
respondents were held at the
same venue, Windmill Casino on the same day and at the same time.
The exclusive general meeting
of the second respondent was also held
at the same venue on the same day but hours later than those of its
four corporate shareholders.
All those various meetings were
facilitated by the second respondent’s lawyers, Phatsoane
Henney Attorneys. The primary
purpose of the lawyers was to put
proper corporate governance structures of the second respondents in
place to ensure that they
comply with the law.
[50]
The agenda of the first respondent’s general meeting (vide “anx
uli2) was almost identical
to the agenda of the second respondent’s
general meeting – vide “anx b”, founding
affidavit. It seems
to me, therefore, that the primary purpose
of the lawyers as regards the first respondent, was also to
facilitate putting proper
corporate governance structures of the
first respondent in place and to help the individual shareholders of
the first respondent’s
four corporate constituent companies
understand corporate structures, their corporate relationships and
corporate functioning.
Those matters were important for the
cultivation of a healthy culture and promotion of a sound system of
values vital for proper
corporate governance – something which
appears to be lacking among the first respondent’s
shareholders.
[51]
In the founding affidavit the first applicant’s deponent
alleged that the respondents were dishonest
because they used an
unauthorised document at the meeting. Indeed the third
applicants later denied that she had authorised
any of the
respondents to act as her proxy. In the founding affidavit the
fourth applicant stated that it would appear that
the respondent or
one of them produced a forged document. Firstly, it was clear
that she did not know precisely who was purportedly
authorised to act
as the third applicant’s proxy. Secondly, she did not see
who produced the false document at the
meeting.
[52]
In the answering affidavit the respondents denied the fourth
applicant’s allegation that any
of them produced the alleged
false document; that any of them signed the minutes, “anx c”,
under the false pretext
that he or she was authorised by the third
applicant or that they were involved in any irregular dealings as the
applicant’s
suggested. They ventured to say that they suspected
that the fourth applicant herself was the culprit.
[53]
In the replying affidavit the applicants denied the allegation that
the fourth applicant, their deponent,
was the culprit who purportedly
signed the minutes on behalf of the third applicant. In
response to paragraph 6 of
the answering affidavit, the first
applicant’s deponent initially replied as follows:
“
8.4
The only logical inference is then that the proxy was signed by the
one of the other three individuals referred
to in 8.1
supra
.
I will deal herewith more fully hereunder.”
See
p137, record.
Contrary
to her initial reply and in response to paragraph 34 of the answering
affidavit, the first applicant’s deponent later
replied as
follows:
“
20.1
At the meeting of 12 April 2014, the fourth respondent signed the
proxy and the fifth respondent produced same.”
See
p144, record.
[54]
The fourth applicant second reply cannot be reconciled with her first
response in the replying affidavit.
It was in sharp contrast to
her primary allegation in the founding affidavit. Mr
Snellenburg urged me to strike it out on
the grounds that it was, in
substance, materially inconsistent with her primary allegation.
The fourth respondent and the
fifth respondent were belatedly
accused. They were deprived of their procedural rights to deal with
the serious accusations attributed
to them for the very first time in
the replying affidavit. Indeed they were unfairly ambushed. I have no
hesitation to strike out
the belated allegations of fraud levelled
against.
[55]
The first applicant and others accused the respondents that they
elected themselves as directors.
The applicants could
democratically have prevented that state of affairs had they not
boycotted the meeting.
[56]
The first applicant and others accused the respondents that all they
were after was the money.
They alleged that the respondents
were concealing the dividends from the other shareholders. They
alleged that the respondents
are unlawfully stashed the dividends
away in the bank nest of Attorney J.J Mhlambi’s instead
of the bank account
of Umyezo – see “anx f”.
As on 12 April 2014 Umyezo did not have a bank account (vide item 7
“anx
uli2”). The applicants were not alarmed by the
item. They knew why. They and their allies had been spreading a
smear campaign which portrayed the directors of the first respondent
in a bad light. They made it difficult for them to open a
bank
account in the name of the company.
[57]
On 23 April 2014 the trio, as directors, resolved to have all
the money received by the first
respondent from the second respondent
deposited into the trust account of J J Mhlambi Incorporated, law
enterprise – vide
“anx 04”. The money was not
stashed away in the personal and private account of the attorney J J
Mhlambi as the
applicants suggested. The applicants knew that
the trust account number concerned. They also knew that the
respondent
had since opened a separate bank account for Umyezo in
accordance with resolution “anx 04”. The respondent
gave
a reasonably innocent explanation as to why they, as directors,
could not immediately open a bank account for the first respondent.
The accusation of the applicants was devoid of any grain of truth, in
my view.
[58]
The applicants rounded off their grievances or accusations as
follows:
“
As
a result of your conduct of dishonesty, detriment to your fellow
shareholders, delinquency, fraud and filing of false sworn statements
in court proceedings, the company makes the following demands on
you.”
See
p48, record.
[59]
The aforesaid memorandum of accusations and demands was annexed to a
covering letter signed by the
first applicant together with the
second, third and sixth respondents. That particular letter emanated
from Litheko Advice Centre
at Thaba Nchu. About Mr M.S Litheko,
the respondents averred that the business relationship between him
and Sun International
(Pty) Ltd soured many years ago.
[60]
At paragraph 18 of the answering affidavit the respondents averred:
“
In
the abovementioned application, to which the Court is referred, the
agreements between Sun International and Mr Litheko and Mr
Makwaba in
terms whereof they were bought out were appended. Both
agreements (with the respective persons) contained a similar
term
that provides that Mr Litheko and Mr. Makwaba
“
will
henceforth have no direct contact, communication or liaison with any
of the directors, trustees or other decision making structures
of our
company (Sun International) or any of the legal entities which own,
form part of or are otherwise related or associated
to us (Sun
International) in regard to any aspect of the business or affairs of
Mangaung Sun (Pty) Ltd.”
See
page 70, record.
[61]
At paragraph 19 of the answering affidavit the respondents
elaborated:
“
To
this end and because Mr. Litheko and Mr. Makwba continued to breach
the agreement and interfered with the business and affairs
and inter
alia the first and second respondents, Sun International sought and
obtained (on 15 February 2010) a court order [case
3794/2009] of
which, for sake of convenience, I append a copy hereto as
Annexure
“03”.
The content
thereof is self-explanatory but
inter
alia
comprises of a final interdict
restraining the said persons from:
19.1
holding meetings of shareholders and/or directors;
19.2
interfering with the affairs of the shareholders of the second
respondent;
19.3
“
the first and second respondents
shall desists [
sic
‘desist’] and are interdicted from, directly or
indirectly, communicating and/or liaising with prospective directors
and shareholders of the fifth [Etapele (second respondent
in
casu
)], sixth [Mathabo], seventh [Tsela
Tshoeu], eight [Umyezo] and ninth [Belega] respondents concerning the
affairs of those respondents
and for any other reason or purpose that
[
sic
‘than’]
to give effect to and comply with the relief provided for in
sub-paragraph 1.5 below.’;
19.4
directly or indirectly holding or obtaining shares in the Mangaung
Sun (Pty) Ltd not obtained on a
recognised stock exchange.”
See
page 71, record.
[62]
At paragraph 21 of the answering affidavit the respondents asserted:
“
Mr.
Litheko did not adhere to the agreement or the court order and
actively engaged and cajoled with the applicants and sixth respondent
in this matter in order to apparently obtain or indirectly still
exercise control over the first respondent. He, with the
assistance of for example the sixth respondent, attempted to derive
economic benefits for himself from the first respondent, to
the first
respondent’s detriment.”
See
p 72, record.
[63]
In their response to the aforesaid averments the applicants replied
as follows:
“
5.
Before dealing with the allegations set out in the first, third,
fourth and fifth respondents’ opposing affidavit
seriatim, I
wish to state unequivocally that the applicants have not relation
whatsoever to Mr. Molefi Simeon Litheko (hereinafter
Litheko
),
do not wish to be associated with him and deny any averments to that
effect and any averments to the effect that this application
is in
fact a “method employed by the applicants a part of a strategy
to gain control of the company to serve the interests
of Litheko.”
See
p135, record.
[64]
The applicants heavily relied on “anx f”, a dossier of
very serious accusations levelled
against the respondents.
There was a widespread dissemination of that dossier. Then the
respondents turned the other
side of the coin. They hit back. The
first applicant and others were hurt. They were stunned by what
was revealed against
their ally. They turned their back to him.
They started singing a different tune. They suddenly wanted the
world to
believe that the never had anything to do with him. It is
too late. They simply cannot distance themselves from “anx f”.
That annexure is telling. It shows that they had everything to
do with him. Before they launched these motion proceedings
they
went to the aforesaid centre where they sought and obtained advice
from Litheko Advice Centre. They cannot now disassociate
themselves from him when they had earlier shown that they were
closely associated with him. They cannot be allowed to somersault.
In
my view they are inextricably bound by that unholy alliance and all
the consequences of such a relationship.
[65]
Mr Snellenburg argued that by sending copies of “anx f”
to banking institutions, among
others, the applicants subversively
acting in collaboration with Mr Litheko and the sixth respondent,
demonstrated that they did
not have the best interest of the first
respondent at heart. The annexure was synonymous to the name of
Mr Litheko.
By repudiating him as they did, the applicants
implicitly admit that there was no real true substance in the
accusations contained
in the memorandum of accusations. Their
disavowal of their association with him was untrue.
[66]
On behalf of the respondents it was contended that even if it
were shown, which allegation the
respondents still deny, that their
appointment as directors and all the resolutions taken at the
Windmill Casino on 12 April 2014
were irregular – such
irregular procedure, irregular appointment of directors
and irregular
resolutions were ratified by consent on 18
September 2014. The court order by Naidoo J encapsulated mutual
settlement
reached by all the parties. However, the first applicant
and others tried to distance themselves from the settlement
negotiations,
the settlement and the related court order. They
alleged that they were not legally represented during those
proceedings
before Naidoo J. They claimed that they did not
mandate Moroka Attorneys or Adv. Thompson to act on their behalf.
They
alleged that Mr Litheko did all that without their knowledge and
instructions.
[67]
The version of the first applicant was far-fetched and clearly
untenable. Hardly two months after the alleged unauthorised
actions of Mr Litheko, they were still in cahoots with him.
Among the resolutions they took on 7 November 2014 was one which
reads:
“
5.
The attorneys of the company are Moroka Attorneys. J J Mhlambo and
Modise Modise are removed with immediate effect.”
See
p174, record.
Six
days later, aided and abetted by Mr Litheko, they wrote and signed
“anx f”. Seemingly they took no steps to
have the
wrong court order set aside or Mr Litheko reprimanded or to have the
alleged irregular resolutions of the 12 April 2014
reviewed and
set aside. They knew all too well that Moroka Attorneys were
appointed as their attorneys with their blessings.
They knew
that they were privy to the settlement of the 18 September 2014. They
also knew that there was nothing wrong with the
resolutions taking at
a general meeting of the 12 April 2014. In my view the allegation of
the first applicant that she was not
bound by the mutual settlement
was untrue.
[68]
In their reply the first applicant and others said that they were not
asking for the distribution of
dividends but rather that their
interests in the first respondents be protected from the dishonest
trio. However, they said
nothing in their founding affidavit or
replying affidavit about the interest of their company or its
creditors. Those two
aspects were material considerations.
Notwithstanding the resolution of the trio to temporarily suspend
declaring dividends
of the first respondent, the fourth applicant was
paid an amount of R39 843,75 from the coffers of the first
respondents on
23 May 2014. The applicants turned around and
insinuated that the payment constituted breach of the resolution of
23 April
2014 – “anx 04”. The allegation or
insinuation that such a payment, made to one of their kind, their own
chosen deponent, indicated that the trio was secretly making similar
payments to themselves to the detriment of the applicant was
ridiculous and baseless. Mr Snellenburg, argued that the trio,
as company directors, made such a payment on compassionate
grounds at
the request of the fourth applicant who was apparently in financial
distress. I am persuaded that the payment, was not,
by any stretch of
imagination, an indication that the trio was embezzling the dividends
fund. The fourth applicant was ungrateful
to allege that such a
gesture of kindness amounted to breach of the relevant resolution.
Once again I pause to point out that an
allegation so serious should
have been made in the founding and not in the replying affidavit.
Since it was not, it fell to be
struck down.
[69]
The theme of the respondents, which the applicants could not deny,
was that over the years the first
respondent had been involved in
many court cases; that as a result of such litigation, the first
respondents incurred enormous
legal costs which has an adverse impact
on the first respondent’s liquidity; that, as the directors of
the first respondent,
they considered it advisable and in the
interest of the company , its creditors and all concerned and
resolved to stop paying dividends
to the first respondent’s
shareholders for a while; that they took such a resolution in
order to pay the creditors
of the first respondent first; that
attorneys and advocates rank among the main creditors of the first
respondent; that the resolution
has agitated the applicants because
previously the second respondents used to pay dividends directly to
the first respondent’s
shareholders and that such a practice
was discontinued because the second respondent could not overlook its
own shareholders and
lawfully pay dividends, to persons who
were not its shareholders.
[70]
I hold the view, and it is a very firm view, that the version of the
respondents throws serious doubt
on the case of the applicants.
It cannot be brushed aside as an unconvincing explanation. The
crucial question is whether,
if interim protection is given now, the
first applicant could ever establish that final protection should be
given for the right
she seeks to protect. It is my considered view
that, at the trial, the first applicant would not be able to
establish that she
deserves final protection of her right.
Since she would not, in my view, interim protection should not be
given –
Webster
supra
.
Accordingly she too failed to satisfy the first elementary requisite
for the grant of interim interdict.
[71]
It has since become unnecessary to deal with the second applicant, Ms
Morrision. It will soon
become apparent why. In brief I
deem it sufficient to say her fate is pretty much the same as that of
the first applicant.
I say no more about her in connection with
the substantive merits of this application.
[72]
It follows from the critical analysis and views that the
applicants cannot invoke
section 163
Companies Act 71 of 2008
.
They have not shown that the conduct of the respondents as directors
is unfairly prejudicial to their interest as the section
requires.
On the contrary, the conduct of the accused directors was reasonably
innocent, procedurally regular, substantively
meritorious and legally
sound. They acted pursuant to a properly taken resolution.
The resolution was taken in the
interest of the company that they
directed. In order to successfully rely on the section, the
applicants, as shareholders,
had to address the qualifying
requirements of
section 163.
[73]
The section requires that:
“
(a)
any act or omission of the company, or a related person,
has had a result that is oppressive or unfairly prejudicial
to, or
that unfairly disregards the interests of, the applicant;
(b)
the business of the company, or a related person, is being or has
been carried on or conducted in a manner
that is oppressive or
unfairly prejudicial to, or that unfairly disregards the interests
of, the applicant; or
(c)
the powers of a director or prescribed officer of the company, or a
person related to the company, are being
or have been exercised in a
manner that is oppressive or unfairly prejudicial to, or that
unfairly disregards the interests of,
the applicant.”
[74]
To this end the applicants have dismally failed. I could detect
no
prima facie
proof of incriminating symptoms, apparent or latent, to evidence that
the interest of the applicants in the dividends of the company
were
unfairly disregarded or unfairly prejudiced or unfairly oppressed by
the conduct of the directors of the company. In
the absence of
oppressive or prejudicial or detrimental conduct , a
shareholder may not straightaway apply to
court. In this
matter it occurred to me that the conduct of the directors was
perfectly justified by the conduct of the shareholders.
[75]
The directors have a fiduciary duty to the company first and foremost
and not to the shareholders.
They are obliged to pay dividends
to the shareholder in accordance with law and not the unrealistic
demands of shareholders.
They have to protect, first and
foremost, the interest of the company and then those of the creditors
and lastly those of shareholders.
The interest of the shareholders
are subordinate, firstly to those of the company and secondly to
those of the creditors.
That hierarchy of interests is central
to a good value system in a culture of corporate governance. It
is that corporate
culture which the shareholders have to learn to
understand and to embrace. It has not been shown that the
directors acted
contrary to the provisions of the statute.
[76]
It is evident that the company is frequently forced to incur
substantially huge legal costs as a result
of selfish internal feuds
for its control and leadership or directorship. It would be a
serious breach of their fiduciary
duty if the directors were to
disregard the expenses or financial obligations of the company and
blindly pay dividends to the shareholders
as if the company had no
financial obligations towards any creditors. The law does not
countenance such illegal disregard
of the interests of the company
and those of its creditors.
[77]
In the circumstance, I have come to the conclusion that the first
elementary requisite for the grant
of interim interdict has not been
satisfied. The version of the applicants is disturbingly
unsatisfactory and doubtful.
The allegations on which it was
based and on which they relied for the grant of interim relief were
devoid of merits.
[78]
In the second place, since they seek interim interdict, the test
requires that the applicants must
establish a reasonable apprehension
of irreparable and imminent harm if an interdict is not granted –
Setlogelo v Setlogelo
1914 AD 221
.
[79]
The first respondent is a corporate persona. It is a company
with its own legal personality.
As a juristic person it has its
own autonomous existence separate from its members, in others word,
shareholders and directors.
In the replying affidavit the
applicants made a sweeping allegation that the company, the first
respondent, was an empty shell.
That was not their case in the
founding affidavit. They failed to substantiate the allegation,
anyway. The company
was and still is no empty shell. The
applicants cannot deny that the company has been dragged to court on
a number of occasions;
that it has had to incur enormous expenses as
a result of litigious disputes and that auditing transactions of its
former director
has created additional financial obligations.
The company was purposefully established. It is subject to its
own articles
of association. However, it also remains subject
to legislative provisions.
[80]
The applicant’s version in this connection corroborated the
respondent’s version that part
of the problem is that the
applicant misconceive the legal nature of the first respondent.
It is inconceivable that there
can be no expenses the first
respondent has to pay. Given the number of legal proceedings
the first respondent frequently
has to defend or oppose. If all
the funds were diverted to the attorney for the applicants for the
entire duration of a trial,
which has not even instituted as yet, how
on earth would the company meet its obligations towards its creditors
and how would it
exercise its right to defend itself in the
contemplated action?
[81]
Even if it were accepted that the first respondent has no expenses or
creditors to pay, how would it
defend itself if the interdict is
granted. The point is this: If the applicants honestly
have real concern let alone
a reasonably genuine apprehension of
irreparable and imminent harm to their right to the dividends, how
come they are so amazingly
slow to initiate action proceedings as
envisaged in prayer 2, notice of motion. If there was an
imminent harm threatening
their rights they would probably long have
instituted the contemplated action against the respondents. Why
are they still
holding back?
[82]
The alleged offensive resolution (vide “anx 04”) which
induced their alleged apprehension
was passed 13 long months before
the application was launched. Almost 20 months since their
alleged cause of action arose,
they are still considering to initiate
an action. Their conduct of the applicants was not consistent
with that of a person
reasonably apprehensive about irreparable
and imminent harm. They have, right from the onset, been
dragging their feet.
The hallmark of an interim interdict is
speed. It is a speedy remedy. In this instance their case
has long lost momentum.
It seems to me that they are going at a
snail’s pace because there is no threat of irreparable and
imminent harm to their
rights or alleged right to dividends.
[83]
In temporary interdict proceedings, whether or not temporary
relief should be granted, the real test is
the apparent harm that
will be done. The harm that will be done to the applicant’s
right if temporary protection is not granted
versus the harm that
will be done to the respondent’s right if temporary protection
is given. In the instant matter, the
latter is more apparent than the
former, in my view.
[84]
It follows that their indecisive conduct militates against their
contention that there was reasonable
apprehension of irreparable and
imminent harm if the respondents are not immediately interdicted.
In my view the applicants
have failed to establish the second
elementary requirements of the interdict.
[85]
The conduct of the applicants caused a great deal of confusion and
suspicion in the commercial world
concerning the integrity of the
trio. Among those that became confused and suspicious were the banks
and the Companies and Intellectual
Property Commission. That
was the sole reason why the first respondent’s directors
resolved to have the first respondent’s
money paid into the
trust account of an attorney. The trust accounts of attorneys
are subject to regular annual trust audits.
The apprehension of
the applicants that there was imminent risk that the first
respondent’s money would not be properly accounting
for was, in
my view, not reasonable. The attorneys are subject to strict
accounting rules regarding funds held in trust.
They have to
keep accurate accounting records. The Attorneys Fidelity Fund,
moreover, secures funds held in trust by attorneys.
[86]
The resolution passed by the directors to temporarily suspend paying
out dividends to the first respondent’s
shareholders could not,
in my view, be regarded as an irreparable and imminent harm that
unfairly prejudiced or unfairly oppressed
the applicants by unfairly
disregarding their interest in the securities of the first
respondent. The court order by Naidoo
J was no authority or
justification for the argument that the directors have to declare and
pay out dividend to the shareholders
irrespective of the liquidity of
the company, and its contractual obligation towards its creditors.
[87]
In the third place, since they seek interim interdict, the test
requires that the applicants must show
that the balance of
convenience favours the grant of the interdict. By the phrase
balance of convenience is meant a measure
of prejudice to the
applicant if interdict is refused weighed up against a measure of
prejudice to the respondent if it is granted
–
Setlogelo
v Setlogelo
supra
.
[88]
This aspect of enquiry ties in with the applicant’s overall
failure to make out a proper case.
They woefully failed to deal
with the balance of convenience. I have already alluded,
elsewhere in this judgment, that they
did not at all indicate how the
expenses of the company would be paid if the interdict were to be
granted. This application
alone, apart from the contemplated
action, will have financial implications for the company. The
applicants take their time
to get things done as I have already
demonstrated. Judging by that alone, it will probably take a
considerable period of
years before the contemplated action is
disposed of. Certainly the company will not survive. That
will not be in the
interest of anyone.
[89]
It follows that the applicants have not seriously addressed the
balance of convenience. In my
view, the prejudice to the
company if the interdict is granted substantially eclipses the
prejudice to the applicants if the interdict
is not granted.
There was no iota of evidence to substantiate the allegation and the
argument of the applicants that they
feared that the respondents
would dissipate the dividends fund of the company unless they were
immediately restrained. The
funds are now in the bank account
of the company. A bank account of a company is also subject to
tight accounting regulations
in terms of the statute applicable to
companies. The integrity and conduct of the directors was not
tarnished by any proven
mala fides
.
The same cannot be said about the applicants and their leader and
ally, the sixth respondent. Their version was bedevilled
with
false allegations. In my view they failed to satisfy the third
elementary requisite for the grant of an interim interdict.
[90]
In the fourth place, since they seek interim interdict, the test
requires that the applicant must show
that no other available remedy
is available to him or her to protect their endangered rights –
Setlogelo v Setlogelo
supra
.
[91]
In their memorandum of accusations and demands, the applicants
threatened that unless the respondents
complied with their listed
demands they would initiate arbitration proceedings – vide 13
“anx f”. They
considered arbitration an adequate
and alternative remedy by then, 13 November 2014. However, they
did not do so. In
the end (27 May 2015) they chose to come this
way instead of going that way. But they failed to explain in
the founding affidavit
why they reckoned that they could no longer
obtain appropriate redress by following that alternative route.
Now I am still
in the dark as to why their initial chosen remedy is
no longer adequate or no longer available.
[92]
Apart from the aforesaid alternative remedy, the applicants have
statutory remedial rights in terms
of subsection 1(1), subsection (2)
and subsection (3) of
section 26
Companies Act 71 of 2008
. As
regards the exercise of those right subsection (4) provides:
“
(4)
A person may exercise the rights set out in subsection (1) or (2), or
contemplated in subsection (3)-
(a)
for a reasonable period during business hours;
(b)
by direct request made to a company in the prescribed manner, either
in person or through an attorney
or other personal representative
designated in writing; or
(c)
in accordance with the Promotion of Access to Information Act, 2000
(Act 2 of 2000).”
[93]
Again the applicants gave no explanation as to why they considered
those alternative remedies inadequate,
ineffective or unavailable.
They should not be allowed to circumvent the remedial procedures of
the statute or to subvert
the exercise of lawful functions by the
directors by simply choosing the adjudicative alternative.
[94]
It follows, therefore, that an adjudicative court process should be
used as the absolutely last resort.
The applicant had
alternative remedies. They did not say why those alternatives
remedies were not adequate, suitable or unavailable.
In my view
they did not satisfy the last elementary requirements for the grant
of an interim interdict.
[95]
Having considered all the requirements of an interdict I am persuaded
and satisfied that the applicants
have not made out a case for the
grant of an interim interdict. It was incumbent upon them to
establish all the requisites
of an interim interdict in order to
succeed. It is trite that failure to prove just one of the four
requisites is fatal to
the applicant’s case. In this
matter none of the requisite was established by any of the
applicants.
[96]
There remains one more issue – the costs. On 22 October
2015 the matter came up for hearing,
Mocumie J was seized with the
matter. The respondent handed up a special supplementary
affidavit and applied for leave to
file it. Attached thereto
and marked “anx a” was a sworn statement by the second
applicant, Ms T L Morrison.
The sworn statement was attested in
Johannesburg on 20 October 2015. She thereby announced her
decision to withdraw from
these proceedings. I guess Mocumie J
noted her withdrawal. Pursuant to her withdrawal the
respondents called upon Blair
Attorneys to file proof of their
mandate in terms of rule 7 to act on behalf of the remaining
applicants. Consequently the hearing
could not proceed. Mocumie
J directed Blair Attorneys to comply with the request in terms of
rule 7; postponed the application
and reserved the costs.
[97]
On 3 November 2015, Attorney B Blair filed a formal notice whereby he
announced that he no longer acted
as the second applicant’s
attorneys of record. The next day he filed an affidavit
on behalf of the first, third
and fourth applicants in response to
the supplementary affidavit filed by the respondents in connection
with the second applicant’s
withdrawal.
[98]
On 5 November 2015 the matter was allocated to Naidoo J. It was
on the roll for hearing.
Meanwhile Blair Attorneys had
complied, or so it appeared to me, with the respondent’s
request. The respondents then
moved an application to strike
out certain allegations made in the replying affidavit. Naidoo
J refused the application to
strike out, postponed the application
and reserved costs.
[99]
On Thursday 26 November 2015 the matter once again came up for
hearing. I was seized with the
matter. Mr R. van der
Merwe appeared for first, third and fourth applicants and Mr N.
Snellenburg for the first, third, fourth
and fifth respondents.
Then there was a surprise appearance by Ms M Qofa for the second
applicant. She was not before
me on the merits. She
informed me that her brief was restricted to the aspect of costs
only.
[100]
As regards 22 October 2015 Mr Van der Merwe urged me to direct that
the wasted costs occasioned by the postponement
be borne and paid by
the second applicant. He argued firstly that the second
applicant filed no formal notice of withdrawal
or presented an oral
application to withdraw. He urged me to give Ms Qofa no
audience on the grounds that the second applicant
was not properly
before me. He concluded his argument with the submission that
the postponement of that particular day was
occasioned by the second
applicant’s decision to withdraw on false grounds.
[101]
Ms Qofa disagreed. She urged me to hear the second applicant
out. I agreed to give her an audience
notwithstanding the fact
that Ms T L Morrison’s new attorney was not formally on
record. She confirmed that the second
applicant made and signed
an affidavit at Mondeor on 20 October 2015. I deem it necessary
to quote paragraph 1 thereof:
“
At
the meeting of shareholders held in Welkom on the 15
th
August 2015, the shoulders (sic) of Umyezo Leisure Investments
resolved to work together and resolved to cease with all legal action
against the company and its director (sic) in all current legal
proceedings including case no 2051/2015 at the Free State
High
Court.”
[102]
The second applicant’s affidavit was served and filed on 22
October 2015. I am persuaded by Ms Qofa’s
argument that
nothing really significant turned on the undisputed facts that the
second applicant filed no formal notice of withdrawal.
In my view she
announced her decision in a much more formal manner by way of an
affidavit then by way of a bare notice. She
even went a step
further to explain the reasons for her decision. Whether her
reasons were sound, true or not was not the
point. No reasons
need be given in the formal notice of withdrawal. No
application, written or oral, is required for
a party wishing to
withdraw his or her case. In the circumstances, l accepts she
properly withdrew from these proceedings on 22
October 2014.
[103]
Ms Qofa persuasively argued the postponement was not the necessary
consequence of the second applicant’s
decision to withdraw. I
am satisfied that the second applicant’s decision to withdraw
had nothing to do with the postponement
of the matter on that day.
At the time the matter was postponed the second applicant was no
longer before the court.
She did not participate in the
subsequent debate which led to the eventual postponement. It
appears from the court order
by Mocumie J that a request in terms of
rule 7 necessitated a postponement. At the time that request was
made, the second applicant
was no longer a party before the court.
It was incumbent upon the attorney for the applicants to have filed
the required
special power of attorney right from the beginning of
these proceedings. He did not. He did so at the peril of his
clients.
It was the earlier omission by the attorney and not
the second applicant’s decision which was the effective cause
of the
postponement, in my view. Therefore, I decline to hold the
second applicant to be solely responsible for such costs. I would,
therefore,
award the costs reserved on 22 October 2015 in favour of
the respondents against the first, third and fourth applicants
together
with the second applicant but only up to the stage of her
withdrawal.
[104]
As to the reserved costs of 5 November 2015 I am inclined to award
those costs in favour of the respondents.
They were prompted to
bring an application to strike out by the manner in which the
applicants presented their case. Although
they did not succeed
before Naidoo J they succeeded before me to have the offending
allegations struck out. When the application
was argued, the second
applicant was no longer before the court. The application no longer
concerned her. Had she been the only
applicant in the matter these
proceedings would effectively have terminated on 22 October 2015. It
follows, therefore, that on
5 November 2015 the first, third and
fourth applicants only were confronted with the interlocutory
application to strike out. Therefore,
only the remaining applicants,
namely the first, third and fourth applicants, are liable to pay the
costs of that day jointly and
severally, the one paying the others to
be absolved.
[105]
As regards the costs of 26 November 2015 I need to make a few
comments. The second applicant rushed back
to court although
she had already withdrawn. Asked why the new attorney did not
filed the customary notice to place himself
on record, Ms Qofa
explained that the second applicant did not rush back on her own free
accord; that she still abided by her decision
that she no longer
wanted to participate any further in the current proceedings
against the respondents; that she was prompted
to rush back because
she received a telephone call from the office of the attorneys
for the applicants that the applicants
were going to ask for a
punitive costs order against her for the wasted costs of 22 October
2015; and that the second applicant
received such a serious
warning at an extremely short notice. Although those comments were
made from the bar, they were not challenged
from the bar. Accordingly
there was no reason to doubt their veracity.
[106]
Then Ms Qofa informed me that in those circumstances she advised her
instructing attorney who, like her
and the second applicant,
also lived in Johannesburg, that given the particular circumstances
of the second applicant’s invidious
position he should not file
the usual notice to avoid unnecessary costs. She then submitted
that the second applicant was
ambushed which was why she rushed back
to court in haste on 26 November 2015. Counsel stressed that had it
not been for the warning
by the applicants, the second applicant
would not have returned and appeared in court again on the 26
November 2015. I was persuaded
by counsel’s submission. The
second applicant deserves to be reimbursed for the wasteful costs she
incurred in connection
with her forced return to court. Such costs
were occasioned by the threat made by her erstwhile co-applicants.
Her unnecessary
return to the battlefield was a direct consequence of
their threat. In the light of all these considerations, I am
inclined
to direct that the unnecessary costs incurred by the second
applicant on 26 November 2015 must be borne and paid by the remaining
three applicants.
[107
The respondents are entitled to the fruits of their success.
The second applicant and the rest of the applicants are
jointly
liable for the costs incurred by the respondents until 22 October
2015. The costs incurred by the respondents from
23 October
2015 must be borne and paid by the first, third and fourth applicants
[108]
Before I make the order, I have to make some general comments about
the annexures, especially the
way they are often marked or
labelled by attorneys. The instant matter is a good example of how
annexures should never be labelled.
*
To the founding affidavit 13 documents were attached of which only 10
were identified and irregularly labelled as annexures:
A, B, C, D, E,
F, LMC, ULI.2, G and H.
*
To the answering affidavit 7 documents were attached and all 7 of
them were identified and regularly labelled as annexures:
01, O2, O3,
O4, O5, 06 and 07.
*
To the replying affidavit 9 documents were attached of which only 6
were identified and regularly labelled as annexures:
A, B, C, D, E,
and F.
*
To the so-called the applicants’ supplementary affidavit 8
documents were attached of which only 6 were identified
and regularly
labelled as annexures: A, B, C, D, E, and F.
*
To the so-called respondents’ supplementary affidavit 1
document was attached, identified and regularly labelled as
annexure:
A.
[109]
It will be readily noted that there were 5 documents marked Annexure
A, 4 marked Annexure B, 4 marked Annexure
C, 4 marked Annexure D, 4
marked Annexure E, and 4 marked Annexure F. This sort of alphabetic
repetition in the labelling of annexures
must be avoided at all
costs. It has to be totally discouraged. During the course of legal
argument by counsels and during the
course of judgment writing by a
judge, it is very cumbersome to refer to, say’ Annexure A’
to the applicant’s
founding affidavit instead of simply
saying ‘ Annexure A’. There is a growing tendency by
attorneys to identify
and label annexures by means of a deponent’s
initials. Using initials is equally cumbersome. At times initials can
be very
long and clumsy. For instance, imagine a document
marked ‘Annexure PZXQ 17’. It is easier to refer to
Annexure
FA.17 instead of ‘Annexure PZXQ 17’. Using
strange labels such as ‘Annexure LMC or ULI.2 which hardly
match the
initials of a deponent is very bad and senseless. Mixing
such meaningless and strange labels with alphabetical labels is
awful.
Attaching unlabelled documents to affidavits is appalling. I
make a special appeal to all practitioners to eradicate all these
practices. Such labels are not user friendly at all.
[110]
As regards a founding affidavit, I propose that annexures be
uniformly identified and labelled as follows: FA1, FA2,
FA3 and
so on, where the prefix FA stands for founding affidavit. As regards
answering affidavit, I propose that annexures be uniformly
identified
and labelled as follows: AA1, AA2, AA3 and so on, where the prefix AA
stands for answering affidavit. .As regards a
replying affidavit, I
propose that annexures be uniformly identified and labelled as
follows: RA1, RA2, RA3 and so on, where the
prefix RA stands for
replying affidavit. These are mere suggestions.
[111]
Accordingly, I make the following order:
111.1
The application is dismissed;
111.2
The second applicant is directed to pay the costs of the
respondents from the commencement of
these proceedings on 27 May 2015
until her withdrawal on 22 October 2015 together with the first,
third and fourth applicants,
jointly and severally, the one paying
the others to be absolved.
111.3
The first, third and fourth applicants are further directed to pay
the costs of the respondents from
23 October 2015 and further,
including the wasted costs occasioned by the postponement of 5
November 2015, jointly and severally,
the one paying the others to be
absolved.
111.4
The first ,third and fourth applicants are also directed to pay the
costs incurred by the second applicant
in connection with the final
proceedings of 26 November 2015, jointly and severally, the
one paying the others to be
absolved and such cost must be paid
on the special scale as between attorney and client.
M.H.
RAMPAI, J
On
behalf of first, third and
fourth
applicants: Adv. R. van der Merwe
Instructed
by:
Blair Attorneys
BLOEMFONTEIN
On
behalf of the second
applicant:
Adv. M. Qofa
Instructed
by:
Nyapotse
Inc.
JOHANNESBURG
On
behalf of the first,
third,
fourth and fifth
respondents:
Adv. N. Snellenburg SC
Instructed
by:
Rossouws
Attorneys
BLOEMFONTEIN